Turkey: CBRT prepping up for aggressive easing – TD Securities

Analysts at TD Securities are expecting the CBRT to cut the 1w repo rate (and so the WACF) by 400bps today and is more than the consensus expectation for 275bps.

Key Quotes

“We think the favorable inflation outlook supports aggressive moves for now, and following September, at October and possibly even December. We push our expectations for a reversal in rates to 2020(higher WACF).”

“FX: The lira stands more than 50% chance to sell off immediately after the CBRT announcement if the MPC delivers more than 300bps of easing. The correction in USDTRY could be around 0.8-1.2%, but, similarly to the 25 July announcement, the pair could close lower on 12 September unless the CBRT cuts significantly more than 400bps. If the CBRT cuts 300bps or less, we expect the lira to respond positively and strengthen vs USD.”